Funk: Employee housing bond is a win-win for the community

Families place an enormous amount of trust on teachers, counselors, coaches and administrators to take care of their child for six or more hours per day. Yet, with the cost of living skyrocketing in Santa Clara County, the ability to attract and retain highly qualified school employees has become more challenging each year.

In an effort to help address this issue, on Oct. 17, the East Side Union High School District Board of Trustees voted unanimously to place a $60 million general obligation bond on the March 3, 2020 ballot to pay for 100 units of executive style housing for district employees. The proposed complex for teachers and classified staff will be built on 4.5 acres of district property located at 830 N. Capitol Avenue, adjacent to the district’s main office.

If this measure passes by district voters, it will authorize $60 million in locally controlled funds to construct below market rental housing for teachers and staff members. This project will attract, hire and retain highly-qualified teachers and support staff for our local high schools in East Side Union High School District.

Bond funds will be used to construct rental housing for our employees to allow them to reside in the communities where they work. The measure will build approximately 100 1-bedroom, 2 bedroom and 3-bedroom units of below-market, high quality rental housing. Employees will be able to live in these units for up to seven years to help with expenses that newly-hired employees face while working in Silicon Valley.

At East Side Union High School District, we have been researching for the past four years financial models to deliver this project to our employees. Most models either left the general fund unprotected or the district would have to give up ownership of its land or relinquish the rights to whom would be eligible to rent the units.

In California, school districts use general obligation bonds to fund school construction and renovation projects. Similar to a home loan, these bonds are repaid over a set number of years. The repayment of funds comes from taxes levied on all taxable properties — residential, commercial and industrial-located within the district.

The average annual assessed tax levy for our measure is expected to be approximately $2.70 per $100,000 of assessed valuation. On $500,000 assessed value, that would be $13.50 per year, per owner.

Assessed valuation should not be confused with market value. The assessed valuation is the value placed on the property by Santa Clara County at the time a property is sold or undergoes a major renovation and is typically lower than market value.

Our community over the years has supported several general obligation bonds for school construction.

We have demonstrated with each bond that’s passed that ESUHSD has been a fiscally responsible agent of taxpayers’ bond dollars. Our schools are beautiful, and we have had no findings in our audits for the past ten years. We continue to have a strong independent Citizens’ Bond Oversight Committee, which must review and audit all bond expenditures. Funds are prohibited from being used for general operating expenses. There are legal safeguards, which prohibit the state from taking these funds and spending them in other districts.

Another unique aspect of this funding model is that the housing project will generate net revenue to the district general fund.

Because taxpayers will pay the principal and interest on the bond and because the district retains 100% ownership of the land and of the housing units, net revenue from the rents will support the general fund. We anticipate the housing units to generate $1 million in the first several years and climb as high as $3 million annually thereafter.

In the future, we see the possibility of helping our employees with down payments on purchasing their first home by using the revenue from rents. This would be similar to programs such as Landed, which helps educators with down payments on homes.

We see this initiative as a win-win for our community.

By decreasing the commute time for our employees, reducing the need for a second job or the need to double up in shared living spaces, we will increase the quality of life for our employees, which in turn, increases the quality of their working environment. Property values go up when the quality of education at our public schools go up.

The time is now to improve access to quality housing for our public education employees.

San José Spotlight columnist Chris Funk is the superintendent of the East Side Union High School District. His columns appear every third Monday of the month. Contact Chris at funkc@esuhsd.org or follow @chrisfunksupt on Twitter.

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Transparency and Accountability are Needed in San JoseNov 18, 2019 at 2:38PM

Teacher housing makes sense. They will be employed, and contribute rent to the operating cost of the building/property, and be much more sustainable than many of the 100% extremely low income/PSH communities that will require lifetime subsidies that aren’t yet fully funded in the long term, unless there are Section 8 vouchers attached (some are but not all) or a massive amount of local funds committed. To put that in perspective, if we built a unit for every homeless person, lets say 8,000 units in the County with an average monthly cost of about $2,000 (low-end) for rent/services, that would be close to $200,000,000 per year — $1,000,000,000 by year five.

The way to make these properties sustainable is mixing Area Median Income levels, so that some of the units are paying more into their rent, and off-setting the cost of the 100% subsidy units. If we were to do affordable housing the right way, the County, school districts, and cities would come together to do a joint bond/measure, instead of trying to reach the same goal separately. Goal, meaning, affordable housing.

The cart is ahead of the horse – but no one is discussing the long term feasibility of many of the Measure A developments once they are built, and need to operate in the long-term.

Proposition 39 was called the Smaller Classes, Safer Schools and Financial Accountability Act. It used the term “school facilities” fifteen times in the measure. Eight of those references ended up in the California Constitution. Six of those references were in Section Three. Purpose and Intent.

“Workforce housing” is not a school facility by any stretch of the imagination. Can anyone reasonably argue that the voters in 2000 approved an exception to the two-thirds approval so that custodians, food service workers, and clerical employees (almost all teachers earn too much money — see what happened with Los Angeles Unified’s workforce housing) can live in relative luxury on the backs of the taxpaying property owners who get no such advantage?

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